Antitrust-shy IBM closed to fresh Sun talks

So much for playing hardball: IBM is apparently not interested in resuming talks to purchase Sun Microsystems, following their recent break down.

IBM is believed to be concerned about the level of scrutiny a potential acquisition of its smaller hardware and software rival might would draw from regulators.

CNBC has reported that IBM's contacts within the US Department of Justice and the European Union said an acquisition would spark an antitrust review lasting six to nine months.

It was earlier reported Sun was willing to consider a fresh offer from IBM, at a reduced price. That would be the second cut, after IBM reduced its initial bid from between $10 and $11 to $9.40 a share.

The first round of talks collapsed in April partly because Sun baulked at giving IBM too much control over its projects without getting guarantees the deal would be completed in the face of the inevitable regulatory scrutiny. Also, IBM was unwilling to agree to executive payouts.

IBM knows a thing or two about the cost and delays an antitrust regulation can bring to operations, and what it can do to a company's reputation and performance.

The company spent 13 years locked in a pointless investigation and long-running court battle with the DoJ, which had grown concerned in the 1960s about the company's domination of the market for general-purpose computers.

The DoJ's idea was to break IBM in to smaller companies that would compete with each other. The case was eventually thrown out in 1981, as the computing landscape changed.

The case, though, is believed to have altered IBM's behavior, with the company reluctant to price too competitively during the 1980s and 1990s in case it would again be accused of exploiting its position.

Even today, IBM is facing a regulatory probe over its mainframe business, this time at the hands of the EU's Competition Commission following a complaint by t3 Technologies. ®